In August 2015, Snapdeal founder and chief executive officer (CEO) Kunal Bahl claimed in an interview with an Indian newspaper that his company would topple arch-rival Flipkart from its perch at the top of the Indian e-commerce market.

He gave Snapdeal seven months to do so. “The one thing I am very, very clear about right now is that I think we’re going to be No. 1 (in terms of sales) by March 2016. I think we’re going to beat Flipkart by then,” Bahl said in an interview with The Economic Times.

“I’m very confident that whatever their (Flipkart’s) numbers are, we will be ahead of them by March (2016).” To say now that the tables have well and truly turned would be a vast understatement. Flipkart—which this month raised a mammoth $1.4 billion in fresh funding from investors led by Tencent Holdings Ltd, eBay Inc. and Microsoft Corp.—is having the last laugh.

And Snapdeal is in a desperate fight to stay afloat as it battles a near-death situation; Bahl has changed his tune in recent weeks and months to indicate that the fate of the company is out of his control and is in the hands of Snapdeal’s investors.

And the online marketplace’s largest investors, led by SoftBank Corp., Kalaari Capital and Nexus Venture Partners, have virtually given up the fight and conceded defeat.

To top things off, Snapdeal’s largest investor, SoftBank (ironically) is now trying to engineer a sale of the e-commerce firm to Flipkart, amid a contentious boardroom battle against Kalaari and Nexus over the sale, according to at least four people aware of the current discussions.

Snapdeal’s board has also held talks with Paytm E-Commerce for the sale, which could be at a fraction of the company’s peak valuation of $6.5 billion, the people said. Snapdeal was among the first Indian unicorns, or start-ups valued at $1 billion or more. An email sent to Snapdeal on Wednesday, 26 April, did not elicit a response as of press time.

Snapdeal has previously declined to comment on the developments at the firm. Requests for comment sent to SoftBank, Kalaari and Nexus previously elicited no response.

The developments of the past few weeks and months at Snapdeal raise the inevitable question—how did things go so horribly wrong for Snapdeal so rapidly?

Culmination of errors

According to company insiders, investors and the people mentioned above, Snapdeal’s current predicament is entirely due to a culmination of a series of errors by its co-founders and its largest investors—SoftBank, Kalaari and Nexus.

It all started in September, when Snapdeal launched an expensive re-branding exercise to transform its image, as it looked to stay relevant in a bruising market share battle with larger rivals Flipkart and Amazon India.

This despite Snapdeal’s board members being aware at the time that the online marketplace could witness a rapid erosion in its valuation, in the event of a fund-raising or a potential sale—which, in turn, would trigger a boardroom fight between the investors over the valuation of Snapdeal.

For the re-branding campaign, Snapdeal forked out nearly Rs200 crore and held at least three heavily advertised sale events, in an attempt to stanch market share losses to Amazon and Flipkart. In July 2016, Snapdeal, which had raised some $1.4 billion since October 2014, still had about $500 million left.

Those cash reserves were wiped out by discounts and marketing, along with its daily expenses and those at its payments unit Freecharge, the people mentioned above said. At the same time, it rejected at least two funding offers because of differences at the board between SoftBank on one hand, and Kalaari and Nexus on the other.

“It’s partly a case of brinkmanship by the investors and founders. Everyone expected the other to back off but no one has been willing to budge. SoftBank had assured Snapdeal that it would invest in Snapdeal in the worst-case scenario. But they obviously wanted the funding on their terms. This wasn’t agreeable to the others,” said one of the people cited above.

Valuation differences

Even as late as January this year, Snapdeal was spending heavily, expecting funds from new investors or SoftBank, despite the differences between investors. But no such deal materialized. Sales crashed in February and March as it cut spending. It cut hundreds of jobs and shut Shopo, a consumer-to-consumer marketplace.

SoftBank is now keen to sell Snapdeal at a cut-price value, but that deal is being opposed by Kalaari and Nexus, since such a deal would value Snapdeal at a fraction of its peak valuation of $6.5 billion and severely reduce the value of the holdings of Kalaari and Nexus, which count Snapdeal as their largest investment. Such a deal would result in a huge blow to Kalaari and Nexus, as it would put the future of their India strategy in jeopardy, as both VCs placed such a huge bet on Snapdeal and their future is literally riding on the outcome of this deal.

The two VCs, along with the Snapdeal co-founders, have demanded that SoftBank buy out their stakes. At the last board meeting, SoftBank expressed interest in partially buying out the stakes of Nexus and Kalaari, but is yet to agree to those terms, the people mentioned above said.

The two VCs, along with the Snapdeal co-founders, have demanded that SoftBank buy out their stakes. At the last board meeting, SoftBank expressed interest in partially buying out the stakes of Nexus and Kalaari, but is yet to agree to those terms, the people mentioned above said.

SoftBank owns 33% in Snapdeal, while Nexus owns roughly 10% and Kalaari nearly 8%, according to documents with the Registrar of Companies. Snapdeal founders Bahl and Rohit Bansal together own less than 6.5% in Snapdeal after cashing out part of their stakes.